Ex-Google executive closes Tawla, sees flaws with SF’s...

1of3Tawla has closed after more than 2 years of business.Photo: John Storey / Special to The Chronicle 2016

2of3Chef Joseph Hashem with owner Azhar Hashem at Tawla in 2016. Azhar Hashem, a former Googler, applied a tech-industry lens to her restaurant’s shuttering.Photo: John Storey / Special to The Chronicle 2016

3of3Mediterranean restaurant Tawla has been forced to close after just two years. Its owner lays part of the blame on the difficulty of keeping staffers in San Francisco, where housing costs are inordinately high.Photo: Photos by John Storey / Special to The Chronicle 2016

Tawla, an upscale eastern Mediterranean restaurant, closed its doors Dec. 16, a little more than two years after opening on Valencia Street.

Spanning 2,400 square feet and serving modern interpretations of Middle Eastern food, Tawla was one of the more ambitious places to come to life in San Francisco in 2016. The restaurant quickly found critical acclaim.

Its owner was a longtime Google marketing executive, Azhar Hashem, an outsider to the Bay Area restaurant world who saw Tawla as a chance to blend her homespun culinary knowledge with her engineering background and 10-plus years of management experience in tech.

What Hashem found in her two years operating Tawla was a Bay Area restaurant industry she sees as broken. Viewing Tawla’s lifespan through a tech industry lens, Hashem found the biggest issue to be staffing.

When the business closed, only three employees from Tawla’s original 25-person team were still with the restaurant.

High housing costs translate to high turnover.

Photo: John Storey / Special to The Chronicle 2016

(Hashem recently published a lengthy report detailing her two years operating Tawla which can be found here.)

According to recent data from hiring site Instawork, the turnover rate in San Francisco restaurants is as high as 90 percent.

The turnover raised what were already high operating costs for the restaurant, Hashem said.

“From our experience, the associated cost of turnover for an employee who leaves us is $2,600 to $3,200. This cost includes sourcing a new employee, training them until they’re able to be independent contributors, and any overtime associated with somebody covering for that shortage in labor,” Hashem said in a report to Tawla investors.

The business saw a 10 percent increase in operating costs due to turnover in its final months.

Hashem said the difficulty in finding workers is linked to the housing market.

“Everyone talks about labor costs, but that’s just a flat view of what’s happening in this industry,” Hashem said. “The cost of living in this city, finding housing, just having a life is the issue.”

Hashem went into the project in 2016 cognizant of the housing problems in the region. She hoped to partially address the issue by offering competitive wages. When Tawla opened, it imposed a 20-percent service surcharge instead of having customers leave tips. A service surcharge can be shared with kitchen workers and other personnel, while tips by law must be reserved for employees who visit customers at tables.

Full-time servers at Tawla made roughly $75,000 to $80,000 a year, according to Hashem. It wasn’t enough to retain employees, she said.

During Tawla’s two-year run, workers brought up the idea of opting out of health care provided by the restaurant to increase their take-home pay, Hashem said.

So Tawla reinstated a more traditional pooled tip model and reduced the service charge to 6 percent. The shift allowed the restaurant to continue to provide supplemental pay for back-of-house employees, and reduced its health insurance costs. The money that was saved, Hashem said, went to employees, meaning front-of-house workers were then making between $85,000 and $95,000 per year.

But the restaurant world’s problems are nuanced, Hashem said. And when coupled with San Francisco’s changing demographics, the issues are compounded.

“I was asked, ‘If I were to do it all over again, would I?’” Hashem said. “Seeing how our industry has been rapidly changing where the core principles behind what I hoped to accomplish are in question, I don’t know if this would have been an endeavor I could comfortably and confidently pursue.”

Justin Phillips joined the San Francisco Chronicle in November 2016 as a food writer. He previously served as the City, Industry, and Gaming reporter for the American Press in Lake Charles, Louisiana. He extensively covered the growth and transformation of Southwest Louisiana’s multibillion dollar energy sector. Justin also served as a columnist for the American Press where he won a Louisiana-Mississippi Associated Press Media Editors award for his weekly food column. In the past, Justin spent time working in the newsrooms of the Contra Costa Times, the Tri Valley Herald, and the Oakland Tribune. He studied journalism at Louisiana Tech University.